I've changed the code for LetExpression (which implements local variables in XSLT) so that the refCount (the number of references to the variable, taking account of loops) is computed during the typeCheck() phase, rather than as a separate scan of the subtree. This eliminates one of the quadratic operations. Compile time, with optimization, is now down from 3900ms to 1500ms under Saxon-B, from 5000ms to 2400ms under Saxon-SA - reassuringly close to the figure of 1180ms with optimization switched off. The Java execution profile still shows opportunities for further improvement.